The CoC's approval of CIRP cost is binding, and their contribution is recoverable from the Resolution proceeds.

Headnote:
Insolvency & Bankruptcy Code - Corporate Insolvency Resolution Process - CIRP Cost Dispute
Fact of the Case:

The Resolution Professional filed an application seeking contributions towards CIRP cost from the CoC members. The CoC had approved the CIRP cost but failed to pay their respective contributions, leading to a dispute.
Finding of the Court:

The court found that the CoC cannot resile from the approved budget costs and disapprove the actual expenditure later. It clarified that the CoC's contribution towards CIRP cost is recoverable from the Resolution proceeds of the Corporate Debtor.
Issues: Dispute over the approval and payment of CIRP cost by the CoC members, objections raised by the majority of CoC members for the continuance of the Resolution Professional.
Ratio Decidendi: The CoC's approval of CIRP cost is binding, and their contribution is recoverable from the Resolution proceeds. The Resolution Professional's actions and expenses must align with the CIR Process, and any personal legal expenses should not form part of the CIRP cost.
Final Decision: The Interlocutory Application was partly allowed and disposed of by the court.

Under Section 60(5) of Insolvency &

Bankruptcy Code, 2016 Mr. Devarajan Raman

The Resolution Professional

…Applicant

Vs.

Vistra ITCL (India) Limited & others

...Respondents In the matter of

C.P.(IB) No. 1632/MB/2019

Vistra ITCL (India) Limited

Financial Creditor

Vs.

M/s Satra Properties India Limited

Corporate Debtor

Order delivered on: 04.03.2024

Coram:

Shri Prabhat Kumar Justice Shri V.G. Bisht

Hon’ble Member (Technical) Hon’ble Member (Judicial)

C.P.(IB) No. 1632/MB/2019 Appearances For the Liquidator : Mr. Pulkit Sharma, Advocate For the Respondent No. 7 & 8 : Mr. Rohan Agarwal, Advocate

ORDER

Per: V.G. Bisht, Member (Judicial)

1. This Application IA 1129/2022 is filed under Section 60(5) of the Insolvency & Bankruptcy Code, 2016 (“Code”) read with Rule 11 of the NCLT Rules, 2016 by Mr. Devarajan Raman, Resolution Professional (“Applicant”) in the Corporate Insolvency Resolution Process (“CIRP”) of M/s Satra Properties (India) Limited (“Corporate Debtor”), seeking following reliefs:

a. Direct the respondents to contribute towards CIRP cost an amount of Rs.80,40,487.50/- (Rupees Eighty Lakh Forty Thousand Four Hundred and Eighty-Seven& Fifty Paise only) as per table in Exhibit - B with in a period of 7 days.

b. Direct that the CIRP cost of Rs. 57,59,187/- incurred for the period 01.10.2021 to 31.03.2022, as per approved budget, which was rejected by CoC at the 16th meeting held on 21.04.2022, be treated as CIRP Cost.

c. Disallow the claim of the member of the CoC who fail to contribute towards the approved CIRP cost within seven days;

2. The Corporate Debtor (CD) was admitted to Corporate Insolvency Resolution Process (CIRP) vide order dated 03.08.2020. Mr. Devarajan Raman was appointed as Interim Resolution Professional (IRP) and later confirmed as Resolution Professional (RP) in the First Committee of Creditors (CoC) meeting held on

03.10.2020.

C.P.(IB) No. 1632/MB/2019

2.1. The public announcement was made on 08.08.2020 and

15.08.2020 for the claims. Claims were verified and the list of creditors was filed with Hon'ble NCLT on 26.09.2020. The CoC was constituted on 28.09.2020 under Regulation 17 (1) of the Insolvency and Bankruptcy Board of India (Insolvency resolution Process for Corporate Persons). The report constituting CoC was filed before this Tribunal. Respondents are members of CoC. As against total claims made by Financial Creditors amounting to Rs. 336,94,26,529/- (Rupees Three Hundred Thirty-Six Crore Ninety- Four Lakh Twenty-Six Thousand Five Hundred and Twenty-Nine only), a sum of Rs.1,45,04,66,684/- (Rupees One Hundred and Forty-Five Crore Four Lakh Sixty-Six Thousand Six Hundred and Eighty Four only) was admitted. Total amount receivable from the CoC towards contribution of CIRP cost is Rs.80,40,487.50/-. (Rupees Eighty Lakh Forty Thousand Four Hundred and Eighty Seven & Fifty Paise only). List of CoC along with their respective voting share is as follows:

2.2. The applicant took approvals for the CIRP cost from the respondents at the CoC meetings periodically. The payments up to 30.09.2021 were approved by the CoC. However, only C.P.(IB) No. 1632/MB/2019 part payments have been made thereby making it difficult for the Applicant to conduct the CIRP. The applicant has to make various payments to professionals and vendors which are getting delayed and there is pressure on the applicant to release dues to the parties who have helped to carry out the process smoothly.

2.3. The respondents have approved the plan of the successful resolution applicant by voting share of 95.40%. The applicant has filed IA/2273/2021 on 01.10.2021 for approval of the resolution plan which is pending adjudication before this Tribunal.

2.4. The applicant has carried out his duties with utmost care and diligence and cannot be made to run from pillar to post to get contribution for the CIRP cost. It will be observed that an amount of Rs.80,40,487.50/-.(Rupees Eighty Lakh Forty Thousand Four Hundred and Eighty Seven & Fifty Paise only) is yet to be paid which is mak

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